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Govt moves to resolve supply disruptions to rein in inflation

JAKARTA, INDONESIANPOST.COM – The government is working to resolve supply chain disruptions, which have the potential to further push up the national inflation rate, Finance Minister Sri Mulyani Indrawati informed here on Monday

Efforts to resolve supply chain issues have included President Joko Widodo’s directive to governors, regional heads, and mayors to determine, in detail, the factors behind the pressure on commodity prices, especially food prices.

Meanwhile, concerning energy prices, the minister explained that the government is trying to adjust the price of subsidized fuel, which has increased by an average of 30 percent.

She noted that the government’s decision to increase the price of subsidized fuel will certainly increase the inflation in administered prices. Still, the decision had to be taken to ease the pressure on the state budget due to the increasing energy subsidy.

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“Thus, we attempt to make sure (of the situation) first — if the problem comes from the supply side, then, we will discuss it from the supply side (first),” she said.

Bank Indonesia (BI), as the monetary authority, has also set policies to control the inflation rate and ensure rupiah stability.

At a virtual event entitled “Bloomberg Recovery and Resilience,” Indrawati observed that the rupiah’s depreciation of around 4.5 percent in 2022 is still relatively moderate compared to many other currencies since the performance of Indonesia’s balance of payments has been relatively good.

“(It is because our) balance of trade experienced a surplus for 27 months,” she said.

Although Indonesia has been quite resilient to economic challenges, the global situation is still uncertain and may become much more complicated as there is a chance that the United States’ Federal Reserve may increase its interest rate, she said.

“It (the interest rate increase) is the potential to be followed by an (economic) recession, while energy prices will remain highly volatile due to the geopolitical situation,” the minister emphasized.

Still, she assured that the government and BI will keep domestic inflation in check by adjusting macroeconomic and monetary policies as well as directly controlling commodity supplies and monitoring the reasons behind the pressure on commodity prices in all regions. (Antara/Theidnpost)

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